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2019 (10) TMI 435
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....by issuance of notice u/s 143(2) of the I.T.Act and the assessment order u/s 143(3) of the I.T.Act was completed vide order dated 27.03.2014 by disallowing certain claims by the assessee and making additions to the total income. The total income assessed by the Assessing Officer was at Rs. 35,88,80,850 as against returned loss of Rs. 2,24,12,466. Aggrieved by the order passed by the Assessing Officer, the assessee preferred an appeal to the first appellate authority. The CIT(A) vide his order dated 04.08.2016 partially allowed the appeal. Aggrieved by the order of the CIT(A), the assessee has filed the present appeal before the Tribunal. We shall adjudicate the issues argued by the learned AR as under: 3. Sale of land whether exigible to Long Term Capital Gain (LTCG) in assessment year 2011-2012 (Rs. 38,82,19,823) 3.1 The Assessing Officer in the course of assessment proceedings noted that the assessee had entered into an agreement for sale on 10.11.2010 with M/s.Maruti Suzuki India Limited (MSIL). The assessee received Rs. 8.50 crore on signing the agreement for sale. The agreement for sale was a registered document with Sub Registrar Office, Edappally, Ernakulam. The Ass....
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....e assessment year 2011-2012 itself." 3.3 Aggrieved by the order of the CIT(A), the assessee has raised this issue before the Tribunal. The learned Counsel for the assessee more or less reiterated the submissions raised before the Income Tax Authorities. It was contended that the capital gain cannot be brought to tax in the relevant assessment year since there is no accrual nor receipt of income during the relevant assessment year. Further, it was submitted that the actual possession was never handed over to the buyers of the property, viz., MSIL on execution of the sale agreement dated 10.11.2010. It was contended that almost 80% of the total consideration was payable only on registration of the sale deed and only on execution of the sale deed, there is a transfer of property. Hence, it was contended that LTCG cannot be taxed in the relevant assessment year. It was further argued that there were many conditions stipulated in the sale agreement dated 10.11.2010 and the willingness to perform on part of transferee was a condition precedent to determine whether there is a transfer effected in the current assessment year or not. The learned AR has filed a paper book containing 241 p....
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.... That the SELLER shall demolish and remove all existing super structures / buildings more specifically described under FOURTH SCHEDULE of this Agreement to Sell, within 3 months from the date of this Agreement to Sell and also remove all debris from the Schedule Property at their cost and expenses. The SELLERS shall obtain all permission or sanction if any required from any local body / authority for demolition / removal of existing buildings / structures as described under FOURTH SCHEDULE. 10. The PURCHASER has granted permission to SELLERS and their authorized officers, persons, employees / workers or any persons working under or engaged by the SELLERS and also their vehicles, to have an easy and uninterrupted access and easy ingress and egress to the Schedule Property for the demolition and removal of all the existing structures / buildings and to remove debris from the Schedule Property and to construct the compound walls by the SELLERS on all four sides, wherever required in the Schedule Property. Such permission shall be granted for 90 days from this day or till the work of demolition, shifting and removal of all the existing structures / buildings, construction of c....
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.... : Where any person contracts to transfer for consideration any immovable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract : Provided that nothing in this section shall affect the rights of a transferee for consi....
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....1) there must be a contract to transfer for consideration of any immovable property ; (2) the contract must be in writing, signed by the transferor, or by someone on his behalf ; (3) the writing must be in such words from which the terms necessary to construe the transfer can be ascertained ; (4) the transferee must in part-performance of the contract take possession of the property, or of any part thereof ; (5) the transferee must have done some act in furtherance of the contract ; and (6) the transferee must have performed or be willing to perform his part of the contract." The A.O. in detail had explained that all the conditions stipulated in section 53A of the TP Act has been fulfilled in this case (page 11 to 16 of the assessment order). The assessee has not been able to dispel this categorical finding of the A.O. by placing any material / evidence. 3.4.4 The Hon'ble Kerala High Court in the case of CIT v. Harbour View [(2018) 409 ITR 599 (Ker.)] had held that when there is physical possession handed over to the buyer of the property and on receipt of part of the sale consideration, the transfer would have been completed as pe....
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....d into and pos session handed over. At least when the returns were filed there was a right conferred on the transferee as per section 53A of the Transfer of Property Act. The transferor though subsequently was absolved from the rigour of section 53A ; in the close of assessment year was obliged to return the cap ital gains as per section 2(47)(v) of the Income-tax Act. The Income-tax Act by the definition clause includes a transaction in accordance with section 53A as a transfer in relation to a capital asset. The consequence flowing from the inclusive definition has to be given effect to as on the subject assessment year and the transferor being absolved subsequently from the rigour of section 53A as against the transferee is of no consequence in applying the rigour under the taxation enactment. The transaction failed and the parties settled between themselves, but the voluntary act of the parties cannot efface the tax liability. We hence answer the questions of law on the facts arising in the above case against the assessee and in favour of the Revenue." 3.4.5 In view of the above reasoning and the judicial pronouncement cited (supra), we hold that the assessee is liable to be....
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.....Act, 1961. As the block of the assets in the case of Plant and Machinery and Building is considered as NIL on computation of the short term capital loss u/s 50 of the I.T.Act, 1961 as per para 4 above, the depreciation claim on the above assets is disallowed. Assessee made a claim for depreciation allowance of Rs. 3,29,519/- for the A.Y. 2011-12. As Rs. 2,28,470/- is not an allowable allowance, only Rs. 1,01,049 is considered as depreciation allowance allowed. Thus an amount of Rs. 2,28,470/- is disallowed being depreciation claim not in order u/s 32 of the I.T.Act, 1961." 5.2 On further appeal, the CIT(A) confirmed the addition made by the Assessing Officer. The relevant finding of the CIT(A) reads as follow:- "8.2 It is observed from the impugned order that the Assessing Officer has worked out the short term capital loss at Rs. 13,38,670/- and the same has been allowed u/s 50 of the IT Act. As a result the written down value (WDV) of the block of assets consisting of plant and machinery and building becomes NIL. Therefore the Assessing Officer was legally correct in disallowing the claim of depreciation of this block of assets whose WDV is NIL. Hence the addition of ....